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Mutual Funds and Mutual Fund Investing - Fidelity Investments

Learn About Closed-End Funds

Like a traditional mutual fund, a closed-end fund (CEF) invests in a portfolio of securities and is managed, typically, by an investment management firm. But unlike mutual funds, CEFs are closed in the sense that capital does not regularly flow into them when investors buy shares, and it does not flow out when investors sell shares.

Even though they have been traded in the U.S. for over a century, closed-end funds (CEFs) are not well understood. A common misunderstanding is that a closed-end fund is a type of traditional mutual fund or an exchange-traded fund (ETF).

All Closed-End Fund Lessons

Closed end funds may trade at a discount (or premium) to their NAV and are subject to the market fluctuations of their underlying investments. Shares of closed end funds frequently trade at a market price that is a discount to their NAV. Closed end funds are subject to management fees and other expenses.